Wed May 21, 2014

Penny Hoarders Hope For The Day The Penny Dies

Every year, the U.S. government loses money minting pennies. They cost around twice as much to make as they're worth. And some politicians and economists say we ought to just get rid of them. They want the U.S. to kill the penny, take it out of circulation. If that happens, a small group of people plan to make a bunch of money.

NPR's Zoe Chace has that story from our Planet Money team.

ZOE CHACE, BYLINE: Steve Wardak is one of those people. This guy is a big fan of the penny. He's never walked past a penny on the street and not picked it up. In fact, instead of taking his change to the bank and cashing it in for dollars, like most people do, Steve does the opposite. He takes paper money to his local bank in Pittsburgh and asks for pennies.

STEVE WARDAK: I have $50 that I don't need for anything else right now. So I'm going to in here to the PNC Bank and ask for two boxes of pennies.

CHACE: Steve is not a mere coin enthusiast. He is a speculator, of sorts. He is looking for copper. These days, pennies are made out of mostly zinc. The metal inside is worth about one cent. But before 1982, they were mostly copper.

WARDAK: Nineteen eighty-two and prior, they were 90 percent copper and they're worth about two cents, maybe a little more depending on the price of copper. So I like to pull those out and double my money very slowly.

(LAUGHTER)

CHACE: Very slowly.

WARDAK: Yeah.

CHACE: This prospecting for copper - one old penny at a time - there are thousands of people doing this. This is the thing, Steve Wardak is what's known as a coin roll hunter. The coin roll hunters, they like to go online and show off their hauls.

UNIDENTIFIED MAN #1: Well, guys. I did it again. I had to go and pick up another box, $25 worth of penny rolls.

CHACE: There are dozens of these.

UNIDENTIFIED MAN #2: These are all pre-1982 copper pennies. See?

CHACE: Some people have special machines that sort out the pre-1982s out from the post-1982s.

WARDAK: I can turn it on for a second to show you how fast it goes.

(SOUNDBITE OF MACHINERY)

WARDAK: These are all copper...

CHACE: Steve doesn't have a machine 'cause he likes to sort by hand. He gets the coins and he brings them home to his fiancé. And this is kind of the thing they do together at night. They sit next to each other in the living room and go through them.

WARDAK: Just get going. Like, I'll give her a box and I'll take my own box - '82, there's '82.

(SOUNDBITE OF PENNIES)

CHACE: You actually get lucky really quickly. Almost a third of the pennies Steve is pulling out are 1982 or before.

WARDAK: These are the copper pennies. You can tell the difference in sound.

(SOUNDBITE OF COPPER PENNIES)

WARDAK: And these are the zinc pennies that they make now...

(SOUNDBITE OF ZINC PENNIES)

WARDAK: Sounds completely different. It sounds like fake money.

CHACE: Kind of subtle to the untrained ear. Listen for the base. Copper...

(SOUNDBITE OF COPPER PENNIES)

CHACE: Zinc...

(SOUNDBITE OF ZINC PENNIES)

CHACE: Steve has collected $475 in old pennies. He figures the copper is worth double the face value, so that's a thousand dollars, practically, stacked in boxes in the back of his closet.

(SOUNDBITE OF PENNIES)

WARDAK: Eighty two...

CHACE: You know, there is this problem with this investment strategy which is, right now, it is illegal to melt these pennies down. The copper in these pennies is stuck there. Unless - and this is what these guys are hoping for - the U.S. government kills off the penny, then the pennies are no longer U.S. currency. You can scrap them, melt them down.

If you turned on the computer right now and you saw that they'd abolished the penny, what would you do?

(LAUGHTER)

WARDAK: I would probably go buy as many boxes as I could afford.

CHACE: Steve, though, he says he would not scrap them right away, because that day - the day they kill the penny - that is a sad day for him.

WARDAK: When the pennies are abolished then that's the end of one of your hobbies right there. 'Cause, hey, I kind of like like look through so many more. And it's fun to do.

CHACE: You would miss them.

WARDAK: Yeah. Yeah, I would.

CHACE: Some guys are already making money off this expectation that the penny will die. Like, this one guy out in Portland, Oregon. He rented out some space in an armored car warehouse, so he has a regular supply of coins coming in. He sorts them with industrial-size sorting machines and sells off the copper ones online. That's that guy's whole job. That's how many people are out there betting against the penny.